Our Surveyor Missed Something: What Now?

Last year, we purchased a 40-foot sailboat, and we hired a marine surveyor to inspect the boat prior to the purchase. Catastrophe struck less than a month after we took delivery, when the headstay parted near the masthead and we lost the mast. The failure was apparently caused by extreme corrosion where the wire rope was swaged to the terminal at the upper end of the stay. We believe that our surveyor should have discovered this before we bought the boat, but he pointed to a disclaimer in the survey report, which states that the survey does not include the rig or mechanical systems. Is there anything we can do about this?

This question raises quite a few issues about a buyer’s relationship with a marine surveyor and the pre-purchase process in general.

I will first note that the reader did not say anything about an insurance claim, but a claim for a corrosion failure will usually be denied under the “wear and tear” exclusion found in all marine insurance policies. As such, the reader may be exploring possible legal action against the surveyor.

It is true that mechanical and rig inspections, and destructive testing, are almost always excluded from the scope of a pre-purchase marine survey. The surveyor typically communicates this by including language in his report regarding the scope of the survey. The problem, of course, is that the buyer does not see the report or the disclaimer language until the survey has been completed and the surveyor has been paid.

A marine surveyor is usually retained through a telephone call, and the relationship between the surveyor and the potential buyer of the yacht is generally a very loose verbal agreement. Many times, the initial agreement is actually made by a yacht broker on behalf of the buyer. A verbal agreement is enforceable, but only to the extent that the parties can identify and prove the undisputed terms of the agreement.

A surveyor may take the time to review the scope of the project during an initial phone call, but they frequently rely upon the disclaimer language of the report. However, if the scope of the survey is not agreed to in advance, the disclaimer language will not be effective, since it was not a part of the agreement between the surveyor and the buyer.

It is possible that the scope of a project may be defined by the custom and practice of the industry, even if there is no formal agreement to limit the scope. This may apply to a pre-purchase yacht survey if the buyer is experienced in yachting transactions and understands the scope of a typical survey.

A new boat owner, however, may not be aware of common industry practice, and as such he or she will not be held to that standard. Notably, a yacht broker will be assumed to know the custom and practice of the industry, and as the buyer’s agent he or she will be expected to make the buyer aware of these standards, regardless of whether the surveyor talked to the buyer before the survey.

Communication is often the key to avoiding legal problems, and the buyer and surveyor of a yacht will both benefit from a continual exchange of information. If the buyer is hungry for information about his or her new purchase, the scope of the surveyor’s job will be readily apparent and there will be no need for legal action against anyone.